Eskom has initiated a public consultation process on its intention to interrupt electricity supply to address escalating municipal debt, protect affordability, strengthen financial sustainability, and advance sector reform.
Nationally, municipal arrears debt owed to Eskom has surpassed R110 billion – pushing Eskom to further action.
Having exhausted all reasonable avenues through the Intergovernmental Relations Framework Act, Eskom is in the process of issuing notices in terms of the Promotion of Administrative Justice Act (PAJA), providing affected parties an opportunity to make representations before further action is considered.
Around 14 municipalities have been identified, selected because they have not settled their accounts for at least the last 18 months, have not met the conditions of the National Treasury municipal debt relief programme, or pose a significant financial risk to Eskom. Initiating the PAJA process ensures that Eskom complies with legal requirements as it takes the necessary steps to maintain the stability of the electricity supply system.
“We have to address rising arrears debt to protect the operational stability we have restored and the financial discipline we have rebuilt in the first three years of our turnaround to deliver on our developmental mandate. Through the turnaround, we are enabling business to protect and create jobs and supporting strategic industries to remain competitive; that in turn enables communities to thrive,” said Agnes Mlambo, Acting Group Executive Distribution.
Eskom encourages all stakeholders to support efforts to resolve the matter and invites written representations or proposals that may assist in achieving a sustainable solution. Eskom will determine and communicate the way forward once all representations submitted through the PAJA process have been fully considered.
Although Eskom empathises with communities that may be affected, the utility has no option but to initiate this process, unless the municipalities urgently regularise their accounts. Supplying electricity without payment is unsustainable. The municipalities collect revenue from customers for electricity services, and failure to remit these funds undermines Eskom’s financial viability, at the same time impacting the delivery of electricity to the relevant communities.
Should the municipalities fail to take corrective action, Eskom will proceed with credit control measures, which may include interrupting electricity supply at predetermined times, as permitted by law. If defaults persist, Eskom will be compelled to limit supply to levels commensurate with payments received.
Collectively, these municipalities owe Eskom substantial arrears amounts that make it impossible for Eskom to delay further intervention.
Throughout the country, municipal debt has surpassed R110 billion, despite the National Treasury’s intervention through the municipal debt relief programme aimed at restoring sound financial management. The debt relief programme ring‑fences historic electricity debt and suppresses related interest to create financial space for municipalities to meet their ongoing obligations. However, the continuing rise in arrears highlights the critical need for Eskom to proceed with debt recovery decisively.
The escalating municipal debt burden also has wide implications for South Africa’s electricity reform agenda, which is intended to enable new entrants to enter the marketplace and is delaying progress on the legal and operational unbundling of Eskom’s Distribution business.
For more information visit: www.eskom.co.za